Is Google's investment in Uber the start of a Nexus car program?

Perhaps it's time for a Nexus S4-wheel drive.

Last week, Google Ventures made its single biggest investment ever when it pumped over a quarter-billion dollars into the on-demand car service, Uber. And that warrants some discussion. Ever since Google revealed that its "X" lab was working on autonomous vehicle technology, people have wondered whether the web titan planned to get into the car business. This always seemed like an unlikely scenario, since Google's leadership team of Larry Page, Sergey Brin and Eric Schmidt is a group of really smart guys.

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It's absurdly difficult and expensive to break into the auto industry, and not nearly as profitable as being a software and services company. Look at the recent history of companies entering the car business. Other than Tesla, virtually every other entrant has run out of cash before selling a significant number of vehicles. Even Tesla, whose Model S has been rightfully praised, was only barely profitable in its most recent quarter, mainly because of its ability to sell zero-emissions credits to other automakers. It remains to be seen if Tesla can become sustainably profitable while growing its business.

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A far more likely scenario is that Google will develop the automotive equivalent of its hugely successful Android mobile operating system. We reached out to Google for comment on this idea, but they have yet to respond.

Let's take a look at how this would likely work.

Nearly a decade ago, Google invested in, and later purchased, Andy Rubin's startup that was developing Android at the time. Google went on to develop and give Android away for free like it does with most of its other services. Google's enormous profits come from selling ads to companies that want the attention and business of Google's users. Google provides an advertising platform to app developers that allows them to make money on the free and open-source operating system.

Last week, separate reports emerged that Google was partnering with automotive supplier Continental and putting big bucks into Uber. This is totally consistent with the company's Android path.

Rather than making its own smartphone as most observers expected, Google partnered with an established manufacturer, HTC, to produce the first Android phone, the G1. The company also made the same software platform available free of charge to any other manufacturer that chose to use it for its devices. For every person that buys an Android-powered phone and uses the "free" Google services therein—including Gmail, calendar, search, YouTube and more—Google earns money from the ads that run alongside.

As Google has frequently explained, "the more people use the web, the better it is for our business."

Google continues to partner with manufacturers including Asus, HTC, Samsung and LG to produce a series of reference phones and tablets dubbed Nexus that highlight the latest Android developments and hardware. Compared to the best sellers like the Samsung Galaxy series, the Nexus devices sell in relatively small volumes, usually barely above what they cost to manufacture. However, they show the way for other companies by introducing technology like NFC, voice actions, face detection and more.

Dealing with increased urbanization

There are many rationales for companies to develop self-driving cars, such as the ability to fit more vehicles in the same space on the road while improving safety by taking the largest variable out of the loop: the driver. There's also another important factor at work here. As the world is increasingly urbanized, people still need to get around. Putting more vehicles on urban roads simply isn't feasible.

That's why car sharing systems like ZipCar and Car2Go are gaining popularity in urban centers. To use these systems after reserving a car online, however, you still have to go find the car. As former General Motors director of advanced technology vehicle concepts, Christopher Boronni-Bird, discussed back in 2010 and 2011 while demonstrating the EN-V concepts, "what if the car sharing service could come to you?"

The whole premise of the Electric Networked-Vehicle or EN-V was that a fleet of them could service an urban community, arriving when summoned by a smartphone, delivering the passenger to a destination, and then going off to pick up another passenger or parking itself for a charge.

GM built its fleet of two-wheeled self-balancing concepts on modified Segway platforms using technology it developed with Carnegie Mellon University to win the 2007 DARPA Urban Challenge. Using a combination of on-vehicle sonar, optical and GPS sensors, plus vehicle-to-vehicle and vehicle-to-infrastructure communications, EN-Vs could be summoned, driven and sent on their way.

Coming back to Google, it already has one of the most extensive cartographic databases ever developed for its Maps and Earth products, including photographic and recognition data for buildings and street signs. Google also has Android, which allows devices to talk to each other, and voice recognition that lets users talk to the devices.

Now add in Uber. Users employ the smartphone app to summon a ride whenever and wherever they need it and pay for it electronically. The way Uber works now, there is virtually no interaction required with the driver—no swiping of credit cards or exchange of cash—customers pay Uber and Uber pays the drivers. All the Uber cars are equipped with GPS so the service knows where they are and can send the nearest available car to the customer.

Now imagine if the driver is removed and replaced with sensors and actuators that communicate directly with Uber/Google servers. If you built an optimized self-driving electric car, you no longer need the old Lincoln Town Cars and Chrysler 300s.

Continental already builds the sensors needed for self-driving cars because most of them are available today as part of stability control, lane departure prevention, active parking and adaptive cruise control systems. Bundle it all together with an open-source Google-developed operating system that includes V2X communications powered by Android and offer it to carmakers.

Google and Continental could partner with a selected automaker like Tesla, Ford or General Motors to create a reference design that would be the Nexus car and potentially the official car of Uber. Nissan, which just started production of its NV200 taxis for the city of New York and is testing an electric version of its compact van, would be another perfect candidate for a Nexus vehicle.

What's in all this for Google? Since the occupants don't need to drive, its Nexus vehicles could be equipped with a large touch-screen tablet with free internet service so passengers can surf while riding and see some Google-provided ads at the same time.

What's not to like? Even the most dedicated drivers hate dealing with urban traffic. Hailing a cab is a hassle. This solution gets you point-to-point personal mass transit. Of course, Google would know everywhere you go, but frankly they already know that, so nothing lost.

I'm happy to drive on curving country roads and leave the commuting to Google.